Kimberly Fields: Well, what I can say is RTX is a long-term customer. We are partnering. We’ve grown our business over this time. I don’t usually get into specifics about specific contracts and customers, but this example on the GTF, we just talked about is a great example of where we are continuing to grow our business with them. And as I said, we’ve got a great partnership with them.
Scott Deuschle: Great, thank you.
Operator: The next question comes from Chris Olin of Northcoast Research. Please go ahead. Your line is open.
Christopher Olin: Hey, good morning. I wanted to ask a little bit more about the titanium market share and maybe focus on the Airbus supply chain sourcing strategy. So it looks like the Canadian government officially exempted the Russian titanium imports from that sanctions list? And that decision confused me, but I guess what I was really confused was the customer behavior because it looks like some of the suppliers in Europe and Canada under the Airbus umbrella, really either did not have any intention of breaking away from Russian supply or adhering to what Airbus had officially saying. So I guess what I’m curious about is kind of your views on what’s been going on lately with the contract movement or lack thereof? And does the fewer breaking off of contracts from Airbus hurt the Northwest titanium capacity expansion strategy?
And I guess, finally, Bob, as one of your last acts of CEO, I’m wondering if you’re going to throw away your Brian Adams records as a protest of these exemptions from Canada. Thanks.
Robert Wetherbee: I want to deal with the last question first. I don’t have any more records, but I’m going to hang on to the digital for sure. If you don’t the Canadians, their friends right? So I would say — let me start with kind of the broader picture and kind of work on my color around that, right? So I think your question was, how do you see restaurant supply and the risk to those investment investing? I think our operations in the Pacific Northwest going to come online. Customers have committed across the board, gives us a great capability to marry up with our other titanium melting. And so I think we don’t see any risk with that. It certainly gives us a lot of flexibility both in terms of the input materials as well as the alloys and the MDUs. So it’s a very broad capability, and we look forward to that.
I think if you look at the overall supply chain, what’s going on perhaps in Canada, I don’t think the Russian material in the supply chain has been totally consumed yet. It’s still working its way through. It’s not to zero, it’s probably going to take into 2025 to do that. I think we have to recognize it’s important to the national interest of the U.S., the Canadians, the Europeans to build airplanes. And that’s what they’re going to do. They’re going to have to build airplanes. And so that’s going to be their first priority. And that’s what you see in some of the exemption activities is but it’s going to be spotty kind of stuff because I think the vast majority of the supply chain are being filled by the incumbents. We certainly are seeing that.
I think all of our competitors around the world are saying the same thing. But think back to the experiences and learnings over the last two years of the supply chain and what’s going on, right? Number one is this commitment to eliminate single points of failure. So where people relied on sole sources perhaps out of Russia, probably not going back to that. Number two is the requalification issues, right? Think about the effort over the last two years to requalify. And here, we are hitting into the start of a wide-body demand increase. So who’s going to take real risk on their ramp to switch supply when they’ve gone to great pains over the last two years to put it in place. So I think that’s — I can’t speak directly for Airbus and their strategy, but I would say that’s the apparent strategy that they’re on because they’re acting like they’ve made the move and they’re sticking to it.
But the titanium industry needs to perform and meet the need. Let’s not give need to go back to another source. That’s our daily mantra. And I think the OEMs are wanting to be — they want a level competitive playing field, but boy, you got to be reliable. As Kim said earlier, every CEO on calls in the last few weeks has talked about the importance of material flow. So I don’t think they take the situation lightly. But I do think there will be spot situations where the industry that doesn’t have the right capability or the right capacity at the right time where you’ll see material flowing. But I would put it at low to no risk for the balance of the decade that the major OEMs would go back to Russian supply in a big way. I can’t predict politics, but you can certainly predict economics.
And I think they’re committed to doing what’s right for their customers to build the claims and reliable flow of high-quality material that’s been qualified over and over again in the U.S. and Europe is going to be their priority. So see, did I answer all the questions, Chris? I think I did, Brian Adams is still on my Rolodex, and North West is going strong than we open, yes.
Christopher Olin: Okay. Thanks a lot. I appreciate it. [Indiscernible] on your retirement.
Robert Wetherbee: All right. Thank you.
Operator: Our next question comes from Seth Seifman of JPMorgan. Please go ahead. Your line is open.
Seth Seifman: Hey, thanks very much and good morning everyone. And let me add my congratulations, Bob, and congratulations to Kim as well. I wanted to ask maybe starting off — starting off about the HPMC profitability. You talked about some lower shipments of high-value aerospace parts and we attribute some of that to outages. Were there more timing issues in the quarter rather than outages? And then how do you expect this to bounce back? And does that lead to a margin back above 20% in the second quarter for HPMC?
Don Newman: Sure. Let me cover that. So first of all, the primary driver for the lower revenues in Q1 were really tied to the melt outage impacts from that Q4 set of events. And the impact that it had on our inventory positions for Q1. So as we have that — those outages behind us, we’re expecting, of course, to be back up to the production levels and we are seeing that, not just expecting it. We’re seeing it. And then take another step upward in terms of our debottlenecking activity. Add to all of that, if you’re talking about HPMC, some of the things that Kim had talked about around forgings. And when you talk about forging, you have to remember, they’ve had two running quarters in a row where they’ve set all-time records on their revenue.
